Investment Scams
/ Stock Scam Fraud / Boiler Rooms
Demographics
In 1980, the number of Americans who owned securities, either
directly or through mutual funds or indirectly through pension
funds, was one out of eighteen. By 1999 the number was one in three.
With the wider participation and acceptance of the public in the
securities markets, the capacity for harm to the general public
has increased. Now more than ever, the impact of securities fraud
extends beyond just the wealthy.
With high individual losses per consumer, generally ranging in
the thousands to tens of thousands of dollars, state regulators
estimate securities fraud costs Americans nearly $10 billion a
year, or about $1 million an hour. Some fraudulent operations have
grossed over $1 million a month from the shattered hopes and financial
devastation they inflict.
Expectations
Bull markets on Wall Street make it easier for boiler room crooks
to operate. For when the big mutual funds are showing annual returns
of 30-40% or more, the idea that you can double your money in a
short time, as these con artists promise, doesn't sound so ridiculous.
The danger is compounded by the average investor's desire for
maximum return, the concern of retirees worried about outliving
their savings, the increase in investment opportunities, and the
growing number of individuals holding themselves out as qualified
investment advisers nationwide.
Products are more sophisticated and your choices have multiplied.
You are also encouraged to be more "aggressive" in your
investments. The marketers of the most legitimate firms down to
bottom-dwelling perpetrators of fraud are singing the same siren
song: "You've got to be in the market or you're going
to be left behind." The message is everywhere. It's hard
to pick up a magazine or watch television or listen to the radio
without hearing advertisements for mutual funds or other securities
products.
Internet Based Trading
Investors are rapidly turning to the Net for both enhanced access
to investment information and for the lower costs to execute trades.
Nearly 14% of all trades are now conducted on-line. The demand
has caused long delays at some discount brokerages in setting up
new accounts. Some brokers can even afford to be selective in their
clients, boosting minimum opening account balances.
Fraud is opportunistic, and fraud operators, always among the
first to appreciate the potential of a new technology, see the
size of the potential market, and the relative ease, low cost,
and speed with which a scam can now be perpetrated.
After buying a computer and modem, they can set up and maintain
a site on the Web for $30 a month or less, and solicit consumers
anywhere on the globe. A prominent state regulator has aptly noted, "Any
con artist not on the net should be sued for malpractice. In my
32 years of investigating fraud, this is by far the greatest money-making
machine for scammers that I have ever seen."
Experts In Their Field
People underestimate the ingenuity of people who make their living
by fast-talking other people out of their money. Career investment
swindlers are very good at their work and know just how to snare
even the most reluctant person.
They take great delight in pulling the wool over the eyes of an
investor who is 100% confident that he or she could not possibly
be hoodwinked. Many well-educated and intelligent people have fallen
for the slick offers of these sophisticated criminals.
Fraudulent sales callers are skilled liars and experts at deceit.
Their success depends on it. Many are coached to say whatever it
takes to get your money while they make hundreds of repetitious
calls, hour after hour, continually honing their skills.
Such skilled but dishonest salespeople, often with years of experience
selling dubious products and services over the phone, pitch opportunities
that may sound legitimate, but are not.
They are extremely good at sounding as though they represent legitimate
businesses as they offer various investments or business and employment
opportunities. Never assume you'll know a phone scam when you hear
one.
Losses to individual investors can be crushing. A 78-year old
investor in Arkansas was persuaded by a cold caller to sell his
blue-chip portfolio and invest in microcap stocks. His eventual
losses came to more than $440,000.
Tax Relief May Help Recover Major Investment
Losses for Fraud Victims
165 Services -
assists qualified U.S. investors in fully deducting their entire
investment losses against ordinary income. 165 Services clients
receive, on average, $50,000 each in tax benefits.
MSS Advocacy Group,
educating and assisting injured investors through competency, compassion
and a compilation of investment fraud loss experts in an effort
to raise public awareness of securities scams while seeking to
achieve maximum tax recovery.
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